Rising oil prices and lower spot market rates dampen Q1 maritime margins

Shipping majors like Hyundai Merchant Marine, Yang Ming, and Hapag-Lloyd have released their Q1 earnings, reporting deficits in the quarter – as the maritime industry faces a steadily rising oil price and a spot market that had been weak for the initial few months of the year.

“We have had a solid start into the current year, but the market environment is challenging,” said Hapag-Lloyd CEO Rolf Habben Jansen in a statement after the earnings release. “Freight rates have been under pressure, bunker costs and trucking cost in some important markets were up, and we faced a weaker U.S.-Dollar, whereas higher transport volumes and synergies supported the result.”

Hapag-Lloyd posted a net loss of $40.5 million in Q1, which is significantly lesser than its Q1 ‘17 net loss of $68.8 million. The reduction could be attributed to the company merging with United Arab Shipping Company (UASC) last year which incidentally, might render direct year on year comparisons moot.

The much anticipated Maersk Line earnings report is coming out tomorrow, and the forecast has not been much different for the container line, with investment bank Jefferies expecting Maersk’s net profit to hover just above the breakeven point.

 

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Falling unemployment rate creates a headache for the logistics industry

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The national unemployment rate fell below 4% in April, which calls for celebration. But in the logistics industry currently going through a labor shortage patch, the news is far from welcome. Every segment in the industry – be it transportation, warehousing, or the last-mile sector – is facing a people crunch and with falling bottom line margins and increasing competition, logistics majors are struggling to retain and fill up vacant positions in their supply chain.

These businesses would also have to contend with the warehouse space crisis. The surge of e-commerce has given a boost to warehousing, but realtors across the country are finding it hard to develop new spaces due to steep land rates near densely populated regions. A CBRE report on warehouse modernization explained that the U.S. warehouse inventory is ‘aging’ and modern warehouse space accounts for a meagre 11% of the country’s total warehouse inventory.

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FedEx CEO Fred Smith Sees Blockchain as ‘Next Frontier’ for Logistics

Blockchain uses computer code to record every step of a transaction and delivery in a permanent digital ledger, providing transparency. The ledger can’t be changed unless all involved agree, reducing common disputes over issues such as time stamps, payments and damages.

FedEx’s interest in blockchain and the Internet of Things are part of the company’s strategy to improve customer service and fend off competition, Smith said. FedEx is working with an organization called Blockchain in Transport Alliance that is attempting to set industry standards for using the technology in transportation.

Blockchain has the potential to lower transaction costs, speed up processes and free up working capital, according to the alliance.

FedEx also is experimenting with a small bluetooth-based, low-energy tracking sensor called Tron, Chief Information Officer Robert Carter said at the conference. The company has taken out more patents on Tron than any other technology in the company’s history. FedEx also is part of a team announced May 9 that will test small drone flights at the Memphis International Airport.

 

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Ports push for higher funding to keep up with multimodal freight spike

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The House Appropriations Committee released its Fiscal Year 2019 Transportation, Housing, and Urban Development Funding bill that has set aside $250 million for port projects across the country. The American Association of Port Authorities though, has firmly responded back with a report saying it would need a lot more to handle the multimodal freight spike, asking for $20 billion for rail and multimodal projects over the next decade.

Inland ports and multimodal hubs are mushrooming across the U.S., and the report states that 77% of the ports are planning to improve rail access over the next 10 years to meet the burgeoning demand, while 67% of them consider inadequate funding to be the primary barrier in completing the projects on time.

 

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Intermodal Volumes See Solid Gains in First Quarter

Intermodal volumes rose 7.2% in the first quarter compared with the same period a year ago, the best gain since the second quarter of 2014, according to the Intermodal Association of North America.

The Intermodal Market Trends & Statistics report from IANA found that growth in the quarter was across-the-board, with domestic containers rising 6.2%, international intermodal volumes up 7.0% and trailers jumping 14.5%.

A number of factors combined to send growth higher, according to Joni Casey, CEO of Calverton, Md.-based IANA.

“Drivers for first-quarter growth were an overall strong economy, the continued growth of imports, higher fuel prices, tight over-the-road capacity and weak comparisons to lower 2017 volumes in some markets,” Casey said.

This was the third quarter in a row in which trailers led overall growth. But the increase was due to growth for 28- and 53-foot trailers with other sizes declining in the quarter.

“Volume grew stronger as the quarter progressed. March volume was up 23%. April was up 30% on a weekly basis,” said Todd Tranausky, senior transportation analyst with FTR Transportation Intelligence in Bloomington, Ind.

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Diesel Up for Seventh Straight Week

The U.S. average retail price of diesel fuel rose 1.4 cents to $3.171 a gallon, the seventh straight week the trucking industry’s main fuel has increased in price, according to the weekly report from the U.S. Department of Energy’s Energy Information Administration released May 7.

Diesel now costs 60.6 cents more per gallon than it did one year ago.

The average price of diesel rose last week in all regions nationwide. California remained the most expensive place to buy diesel, with a gallon going for $3.863, followed by the West Coast at $3.640. California has seen a gallon of diesel increase 93.6 cents in the past 12 months. The Gulf Coast had the lowest price at $2.955 a gallon, EIA reported.

Gasoline fell a tad, dropping from an average price of $2.846 a gallon April 30 to $2.845 on May 7. The average price of a gallon of regular gas has gone up 43.5 cents from one year ago.

Projections on fuel prices for the rest of this year were quickly revised upward by EIA, and futures traded higher after President Donald Trump’s decision to take the United States out of the 2015 international accord with Iran.

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Norfolk Southern awards safe chemical shippers

Norfolk Southern has awarded its 2017 Thoroughbred Chemical Safety Award to 52 chemical customers in recognition of their safe handling of rail-shipped products.

During the year, the railroad said, the companies shipped 153,213 carloads of chemical products regulated as hazardous material on Norfolk Southern’s rail lines without incident.

The annual safety award was established in 1995 to recognize chemical manufacturers and plants that ship 1,000 carloads or more of hazardous products over the railroad without a single incident. Forty-five corporations and seven plants attained the benchmark for 2017. Six of these customers shipped more than 5,000 carloads each without incident.

As a common carrier, Norfolk-Va.-based NS, like other U.S. freight railroads, is obligated to offer transportation of hazardous materials. During 2017, hazardous materials shipped by customers on Norfolk Southern lines included industrial chemicals used to manufacture consumer goods, crude petroleum, ethanol, and fertilizers.

The carrier typically moves these products in tank cars owned or leased by customers, who are responsible for maintaining the cars and ensuring that they are in good working condition and properly secured for transit.

Norfolk Southern is a voluntary participant in the American Chemistry Council’s Responsible Care Partner Program, and observes strict standards in identifying, reducing, and managing process-safety risks in chemical transport.

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Tesla may be abandoning Semi project

It’s been a rough few weeks for Tesla, with production problems, lawsuits, and analysts speculating that the company is running out of money and will need a capital raise before the year is out to keep going. Now, Seeking Alpha writer John Engle is suggesting that the much-anticipated Tesla Semi project may be dead.

The Tesla Semi was unveiled in November 2017 to great fanfare and intrigue. Did Tesla have the magic ingredient to make an all-electric truck viable that has so far eluded so many others? A series of public announcements from the likes of Pepsi, Anheuser-Busch, and UPS followed, suggesting that this truck was maybe – just maybe – going to revolutionize the industry.

After the initial glitz wore off,industry experts starting dissecting the few available numbers on the truck – and it wasn’t always good. Still, many believe an all-electric Class 8 truck could work in certain applications and there remained optimism that Tesla could deliver.

Then the Model 3 came along. Tesla’s Model 3 production problems are well-documented, and the long-awaited car has run into one roadblock after another as Tesla and Elon Musk try to straighten out their issues.

In the company’s most recent earnings call, Engle points out that Musk never mentioned the Tesla Semi – the darling of the company just mere months ago – until he was asked specifically about it by Phil LeBeau of CNBC, who wanted to know about reservation numbers and how far along in the process the development was.

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Trucking Alliance Pushes Congress to Tighten Truck Driver Drug Testing

The Alliance for Driver Wellbeing and Security, otherwise called the Trucking Alliance, declared it will push for congressional entry of another drug testing law to require any individual who applies for a wellbeing touchy occupation in the trucking business to check no opioid compulsion or unlawful drug use for no less than 30 days preceding work.

(According to our source). The Trucking Alliance reported its opioid test activity at the Assembled Countries, as a feature of an occasion entitled, “The Utilization of Innovation to Advance Street Wellbeing – The Brazilian Experience.” Brazil requires all business truck drivers to breeze through a hair test before re-establishing their permit. In excess of 1 million Brazilian drivers have either fizzled the hair test or declined to reestablish their permit since the law took impact two years back.

The Alliance is a coalition of cargo and co-ordinations organizations that help the appropriation of innovation and directions to enhance security in trucking, for example, mandatory truck speed limiters, mandatory electronic logging gadgets, enhanced driver preparing and screening, and propelled wellbeing help frameworks.

“Ebb and flow drug testing strategies for truck drivers are fizzling,” said Path Kidd, overseeing director of The Trucking Alliance. Kidd told UN participants that in 2017, J.B. Chase Transport distinguished 1,213 individuals who tried positive on their pre-work hair test. However, 90% of the organization’s truck driver candidates passed the administration ordered a urinalysis. “Obviously, the U.S. Bureau of Transportation’s pre-business drug test protocols are missing most way of life drug clients and opioid addicts, and that is a national issue for our industry,” said Kidd.

“We have an opioid problem in our nation, and from my experience, we have one in our industry, too,” said Dean Newell, vice president of safety and driver training at Maverick USA, headquartered in Little Rock, Arkansas.

Opioids are undetected in a man’s framework following a couple of hours, permitting opioid addicts to stay away from drugs before submitting to a urinalysis. In any case, a hair exam can identify drug use for up to 90 days.

As indicated by The Alliance, opioids subject to drug manhandle in the trucking business incorporate codeine, morphine painkillers marked under several names, hydrocodone, hydromorphone, oxycodone showcased under such names as OxyContin, Percoset, and Tylox, and the exceedingly addictive opioids Methadone and Fentanyl. The U.S. Bureau of Transportation as of late included four of these – hydrocodone, oxycodone, hydromorphone, and oxymorphone – to its pre-work drug test protocols. Be that as it may, unless the candidate takes these opioids inside a couple of hours of gathering, a urinalysis drug test can miss their utilization, say hair testing defenders.

“We trust Congress will take after Brazil’s administration and require a drug test that demonstrates point of fact that a truck driver work candidate hasn’t taken unlawful drugs or mishandled opioids for no less than 30 days,” said Kidd.

Kidd likewise said Congress should think about another drug test law for all ebb and flow truck drivers, requiring a hair test before they recharge their business driver permit, as Brazil requires. “Too numerous escape clauses permit truck drivers to skip arbitrary drug testing, even after they’re associated with a genuine substantial truck mischance.”

Newell concurred that present controls don’t catch way of life drug clients. “We’ve had 154 drivers at Dissident who fizzled their hair test after they finished a pee test. Those 154 drivers are working for another organization,” clarified Newell. “They’re running here and there the street with our families, and that isn’t worthy.”

Kidd included that since 2006, J.B. Chase Transport has declined to utilize 5,060 employment candidates who fizzled a hair test in the wake of passing their urinalysis. The greater part of those truck driver candidates discovered occupations at other transportation organizations in light of the fact that all U.S. transporters utilize just the base governmentally required urinalysis.

“Increase J.B. Chase Transport’s involvement by the huge number of truck driver candidates every year over the Assembled States, and we have a noteworthy issue,” said Kidd.

Hair testing “will spare lives and hair testing is the proper activity,” said Newell. “Dissident needs to ensure the organization is the most secure it can be, and that all drivers are all around prepared and without the drug. We have an ethical commitment to our workers, however, we likewise have an ethical commitment to general society.”

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